DEFINITION of 'Bitcoin Dust'

Bitcoin dust refers to the small amount of bitcoin which is lower than the minimum limit of a valid transaction. 

Bitcoin dust is the relatively smaller amounts of bitcoin lying in a particular wallet or address whose monetary value is so tiny that it is even lower than the amount of the fee required to spend the bitcoin. It makes the transaction impossible to process.

BREAKING DOWN 'Bitcoin Dust'

Whenever any transaction occurs on the bitcoin network, it needs to be validated for authenticity so the transaction can be processed in a reasonable amount of time.

Miners validate the transaction and add it to the blockchain network. They are paid a mining fee for performing this service, which can range from theoretically zero to a very high amount.

Due to the working mechanism of the blockchain network, at times the mining fee can be higher than the actual amount of transaction. Bitcoin dust refers to bitcoin transaction amounts of such cases, where the fee is higher than the transaction amount, making it impossible for the transaction to occur.

Such miniscule transactions, if initiated, are dropped, and need to be carried out again between the sender and receiver. Such bitcoin dust can lie in different wallets, making it a worthless holding until the mining fee comes down, or more bitcoins are added to the wallet to process a larger transaction. (See also: How Bitcoin Works.)

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